Times of Plenty
Gardeners and consumers alike must preserve and protect their returns.
As Mom and I surveyed her large tomato patch, we stood in stunned silence at the vast plethora of fruits before us.
I privately wondered why my parents succumbed year after year to the temptation to continually plant gazillions of tomatoes. Mom and Dear Old Dad like salsa, sauces, fresh slices, and the many other dining opportunities tomatoes present. But, as typically the case, here was another harvest of epic proportions.
Mom sighed. “I am getting sick of tomatoes,” she groused. “I can’t wait for a frost to kill them all.”
I slowly turned to face her, horrified at the callous comment boldly proclaimed in this time-o-plenty.
Tomato season in Wisconsin is short, and gardeners make the best of it knowing that by January they will be dreaming of tomato-y days of yore. The end of August bounty, however, brings a surplus situation. What to do with the excess?
Give it away or preserve it, of course. But we cannot allow good tomatoes to go unappreciated!
So it is with the consumer or business who enjoys times of economic advantage, or even mere economic comfort. Excess funds can be saved or wisely invested for future gains. Or, like a field of squandered tomatoes, sadly lost and wasted.
How can you help members handle funds wisely during times of plenty? How does your credit union manage its own investment opportunities?
‘It’s difficult to think anything but pleasant thoughts while eating a homegrown tomato.’—Lewis Grizzard, American writer
Financial advisors can think pleasant thoughts when they effectively communicate with those they serve—and speaking their language is a good first step.
“What’s Your ‘Money Script’?” asks Boston College. Outlined here is the belief of financial planners that individuals maintain core beliefs from childhood, culture, and extended family that can be difficult to change.
There are three possible scripts that affect financial decision-making:
- Money avoidance: The belief that virtue exists when one lives with less.
- Money worship: The key to happiness is more money.
- Money status:Net worth and self-worth are synonymous.
Apparently, “one person can hold multiple scripts, and these scripts can even contradict each other.”
“Money Concerns Sap Mental Capacity,” is another Boston College revelation. “Poor and working people’s continual worries about money cloud their thinking and make it more difficult to perform simple tasks,” the article states.
This phenomenon is not a result of stress for such individuals, rather “thinking about financial issues interfered with their working memory.”
An interesting experiment among farmers revealed those feeling flush post-harvest scored better on tests than those pre-harvest, who felt relatively poor.
“Generations X and Y Prefer Old-Fashioned Service,” according to Financial Planning. “People between the ages of 35 and 50 put a high premium on personal relationships with their banks,” the article notes.
Indifference from financial institutions creates frustration and “participants in the study particularly valued the idea of a bank that would provide individualized advice on money management, from protecting inheritances to investing money to creating sound budgets.”
This runs contrary to the expectations of many financial planning providers, who believe these consumers seek integrated technology platforms, online games, and social media networks to facilitate financial decision making.
Meanwhile, “Gender Divide a Growing Issue for Advisors,” says Financial Advisor. Women prefer to align investment choices with social and environmental values, as this is “important for 65% of women but only 42% of men.”
Distinctions in investing preferences are important as women have a growing economic impact and “are the biggest emerging market in the history of the planet.”
Indeed, “If financial brokers and advisors are going to serve this fast-growing market, they had better be attuned to the gender gap in investing.”
“Most advisors can tell you that clients don’t always share all their personal financial information,” according to Financial Planning.
Target market groups are among the reticent:
- Almost one-third are pre-retirees and retirees;
- One-fifth are affluent; and
- Two-thirds of those employed are managers or professionals.
Reasons for keeping mum include the belief that such information is too personal or irrelevant. “Health and marital difficulties rank high among the critical subjects clients do not discuss” and “more than one-fourth (25%) carry debt their advisors do not know about.”
‘I believe that as long as there is plenty, poverty is evil.’—Robert Kennedy
“Is a $1 million retirement portfolio realistic?” Probably not, according to Market Watch. A more realistic expectation may be a $500,000 nest egg.
Still, “most people with saving goal of $500,000 would have to save an inflation-adjusted amount near $700 per month for the next 30 years or $1,300 per month for about 20 years. Those who have only about 10 years left to save anything would have to put away roughly $4,000 per month—an impossible amount for most people.”
Another retirement planning reality is that more are carrying debt into retirement, according to Boston College.
“The number of people in their 60s who have debt has grown from just under half in 1998 to nearly two out of three in 2010. And their debt, as a share of their assets, has surged during that time from 10% to 18%.”
A major culprit in the debt problem is mortgages. More than half of older Americans carry one, partly because they are paying them off more slowly and partly because mortgage amounts are larger.
Of further concern, “17% of mortgage borrowers who are close to retirement age owe more than their house is worth.”
In sum, it is not only saving that should be a concern for retirement planning, but also debt management.
Times of plenty may exist to varying degrees. Sometimes the weather is not conducive to a prolific tomato crop and sometimes personal circumstances or prevailing national or global economic situations impact debt burdens and saving capacity.
The important thing for gardeners and consumers alike to do is to preserve and protect returns.
How might your credit union help members grow and keep their harvest?
As American novelist E.W. Howe noted, “If a man has money, it is usually a sign, too, that he knows how to take care of it. Don’t imagine his money is easy to get simply because he has plenty of it.”